Indian funds to cut cash; eye engineering and IT stocks

Mumbai: Indian fund managers will cut cash and hunt for opportunities mainly in the basic engineering and software sectors in the March quarter, a Reuters poll of domestic money managers showed.

Boosting their confidence is a rebound in India’s economic growth and industrial output, raising hope that the corporate sector would jump-start stalled expansion plans.

Eight of the nine respondents in the Reuters Asset Allocation Poll conducted between 17-23 December said they would maintain or raise equity investments In India.

Indian stock funds held cash worth Rs19,000 crore at end-November, according to data from Morningstar.

Six of them said they will raise bets on basic engineering stocks which made up one-tenth of India’s diversified equity funds’ assets at end-November, making it their third most preferred sector after financials and energy, data from ICRA Ltd showed.

“Capital goods and engineering stocks should do well next year given a pick up in private capex,” said Pankaj Tibrewal, who manages about $320 million (Rs1,467 crore) for the Indian unit of US insurer and asset manager Principal.

Engineering and construction firm Larsen and Toubro Ltd and power equipment makers Bharat Heavy Electricals Ltd and Crompton Greaves Ltd were among the top 20 popular stocks by the number of funds investing into them at end-November.